March 28, 2014
What is a revocable living trust?
A revocable living trust (also known as an inter vivos trust) is a separate legal entity created to own property, such as a home or investments.
The trust is revocable, which means that during the grantor's lifetime (the grantor is the person who originally owns the property and creates the trust), he or she controls the trust. Whenever the grantor wishes, he or she can change the trust terms, transfer property in and out of the trust, or end the trust altogether.
The trust is called a living trust because it's meant to function while the grantor is alive. The trust can continue after the grantor's death, but the trust becomes irrevocable the moment the grantor dies.
Revocable living trusts are used to accomplish various purposes:
- To ensure that property continues to be properly managed in the event the grantor becomes incapacitated
- To reduce costs and time delays by avoiding probate
- To lessen potential challenges to or elections against a will
- To maintain privacy
- To avoid ancillary administration of out-of-state assets
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